Let's get ethical: which saving and investment products allow you to do good and STILL make a healthy return?

With Good Money Week in full swing, we mark the ethical investment campaign with a look at the green opportunities that can make you a healthy return.

Socially responsible investments have become more commonplace in the investment universe, thanks to an uptick in demand.

There has been an 11 per cent increase in assets under management in across 196 sustainable and ethical funds, rising by £10billion in the past four months to £96billion, according to investing firms Good With Money and 3D Investing.

Going green: the demand for ethical and sustainable products have rocketed in the UK

There's now a plethora of investment opportunities under the 'ethical' banner to sift through. Here are some of the highly rated and newest products available.

The fund selects stocks that play into nine identified social and environmental themes, such as resource efficiency, sustainable transport, education or healthcare.

He credits the managers of the portfolio for actively seeking out companies providing positive solutions to various social and environmental issues while outperforming global equity funds over the past five years.

'What really differentiates this fund is the publication of an annual report where they detail absolute measure of positive environmental impact,' he says.

'For every £1million invested in the fund in 2016, 1,200 MWh of renewable energy was generated, equivalent to the total energy use of 60 average UK households.

'Also 1,600 tonnes of CO2 emissions have been avoided, the equivalent to taking 333 cars off the road for a year.'

The fund has returned 68 per cent over the past five years to 11 October.

The trust's objective is to enable investors to benefit from growth in the markets for cleaner and more efficient energy, water and waste services.

A £1million investment in the trust produced 340 megalitres of water treated or saved, which is equivalent to the waste water generated by about 2,700 UK households, according to Impax's latest annual report.

The trust, which celebrated its 15th birthday in February, also recovered or treated 79 tonnes of materials per £1 million invested - the equivalent of the total waste produced by more than 80 UK households.

'It is worth mentioning that this trust is currently trading at a 10 per cent discount to its net asset value, reinforcing the attractiveness of such an investment,' Lardoux says.

The Threadneedle UK Social Bond fund aims to achieve a positive social impact by investing in listed bonds issued by organisations that support socially beneficial activities and balanced economic development - primarily in the UK.

Key social themes include employment, education, social housing, transport and infrastructure.

The fund was launched in 2014 through a partnership with Big Issue Invest, the social investment arm of The Big Issue Group.

More than 80 per cent of the fund's assets has been allocated to investments with a medium to high social impact, according to its most recent annual report.

'Also, using a “Jobs Assessment Methodology” shows that 83 per cent of the assets are concentrated in sectors with a good jobs performance and 87 per cent of the assets are in sectors that have a relatively high employment concentration in the most deprived areas of the UK,' Lardoux says.

The fund has returned 24 per cent over the past five years.

The traditional ethical investing excludes from consideration controversial sectors as well as those involved in animal testing

Bonds

At the beginning of the month, impact investing company Lendahand Ethex launched a bond that bankrolls the supply of solar energy in homes in Africa.

Called Energise Africa, the bond hopes to whet investor appetite with returns of up to 6 per cent each year. Investors can deposit a minimum of £50 in different projects and can choose the location and term of their investment over two to three years.

The idea here is the company will install solar home systems in African households and will recoup the cost over a one to two-year period. The homeowner will own the system once they complete the course of payments.

The product can also be held in the tax-efficient innovative finance Isa through the online platform Lendahand.co.uk.

The Energise Africa bond will bankroll the supply of solar energy in homes in Africa

Investments in the bond aren't protected by the Financial Services Compensation Scheme (FSCS), which covers investors in regulated products up to £50,000 in the case of an investment company going bust.

Meanwhile, the more recent bond by renewable energy firm Monnow Valley Biomass takes a different tack.

It seeks to raise money to go towards refinancing the installation of two new biomass systems at a goat farm in Monmouthshire, supplying goats’ milk to companies including Waitrose.

Investing in a refinancing project is risky business, but the firm is attempting to woo investors by offering interest of 8 per cent.

This product is the epitome of long-term investing as the bond is due to mature after 19 years. In other words, investors wouldn't receive their initial investment back until 2036. However, there is a secondary market for investors sell the product on if they so choose.

It is available through ethical peer-to-peer finance platform Abundance Investment and can be held for in the Abundance innovative finance Isa - which means investors can earn tax-free returns.

As Abundance Investment is an authorised financial firm in the UK, investments made through the platform are protected by the FSCS safety net.

It is important to flag that both bonds are unsecured so all of your capital is at risk if you choose to invest.

Ethical savings accounts

Ethics but what ethics?

Not all propositions classified as an ethical investment are the same, so it is important for investors to do their research before piling into one.

There are three main strategies that have stemmed from the concept of investing in a way that has a positive impact on the world.

One of the most common forms of this is ethical investing - the practice of excluding controversial sectors such as tobacco and armaments as well as those involved in animal testing from consideration.

So firms that reduce their carbon footprint and those with good corporate governance structure would make the cut.

Crucially however, this strategy does not factor in the impact of the product or services.

Impact investing, on the other hand, goes a step further. This type of investing seeks out companies, organisations, and funds with the intention to generate social and environmental impact through their products, services and business practices.

For those who have no appetite in taking a risk and investing their money, there are a number of ethical savings accounts available.

These are relatively risk-free as savings in UK banks, building societies and credit unions are protected by the FSCS. However, the trade off here is lower returns compared to what you could achieve by investing.

It is difficult to compare ethical savings account because one could offer an attractive headline savings rate but aren't actually as ethical as they claim.

Here, individuals would have to decide what is more important: the return or the ethics.

The best known names in the ethical savings account space are Ecology Building Society, Charity Bank and Triodos Bank.

The three institutions rank one, two and three respectively on ethical finance research firm Ethical Consumer's guide to ethical savings accounts.

Ecology Building Society has stopped issuing its cash Isa that pays out 1 per cent in interest to new customers as a temporary measure because of high levels of demand.

Meanwhile, the Charity Bank equivalent pays 0.96 per cent but requires a minimum opening deposit of £250 and a 33 days notice period, whereas Triodos Bank's pays 0.75 per cent with a minimum opening deposit of £10.

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